Langton Capital – 2021-03-23 – Deliveroo (IPO tailwinds), first (and hopefully last) year of Covid, shop closures (mostly chains), overseas holiday (don’t bank on ‘em) etc.
Deliveroo (IPO tailwinds), first (and hopefully last) year of Covid, shop closures (mostly chains), overseas holiday (don’t bank on ‘em) etc.
A DAY IN THE LIFE:
If you leave stuff lying around on your desk, nasty little bills, random Post It notes and reminders of jobs to do etc., how long is it, on average, before they get either consigned to your two-foot high in-tray purgatory to be studiously ignored for another few months or, to cut out the middleman, have coffee spilled on them and get filed straight into the bin without passing Go and without collecting £200?
Because, I would say, at normal rates of attrition and coffee spillage, it’s about three weeks.
However, whilst this can help if it’s a clean, albeit coffee-stained, desk that you’re after, it would appear that Stalin’s phrase, ‘no man, no problem,’ hasn’t been adopted by the VAT authorities when it comes to small businesses paying their bills.
Hence, ignoring reminders isn’t always without consequence and, just in case the FCA is reading this, and we have definitely seen some of their letters swimming around in coffee somewhere, to do so does not constitute financial advice. On to the news:
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DELIVEROO – MORE DETAIL RE IPO.
Deliveroo yesterday gave further details re its upcoming IPO. See premium email.
PUBS & RESTAURANTS:
Covid – the first (and hopefully last) full year:
• Trade journal The Morning Advertiser has conducted a survey of readers finding that 28% of respondents had not traded for more than 12wks in the last 12mths. This is the perhaps inevitable result of three national lockdowns alongside a raft of Tiers and other restrictions that made trading, even when out of lockdown sometimes unprofitable and often illegal. The MA says that 3.5% of readers had opened for less than four weeks whilst 18% had only traded for between 8wks and 12wks.
• The MA reports that more than half of respondents said that their takings for the 12mths were down by more than three quarters on the prior year. A further 30% of respondents stated that revenues during the Covid-19 pandemic were down by between 50% and 75% on the prior year. Sales at several times were clearly down by 100% with December, an ‘open’ month, registering trade down by 84% per UKH’s CEO Kate Nicholls.
• Pragma Consulting also looks at the first year of lockdown saying that ‘the extent of the multiple lockdowns of 2020/2021 has not yet been fully felt by the F&B sector but its impact on casual dining has already been severe, proving near fatal to a business model already struggling for survival amidst mounting CVAs.’ Pragma says home delivery has been ‘the clear beneficiary of lockdown’. Just Eat has referenced tailwinds and Deliveroo shareholders are looking for the exit via the company’s IPO.
• Pragma says that ‘hybrid kitchens’ may have a future. It says that these have ‘kitchen facilities largely standardised’ but offer multiple brand cuisines from the same unit. Pragma says ‘whilst no single format will exclusively dominate the future F&B sector, if town and city centres provide the much-needed investment in public realm required to regain relevance with consumers, then the hybrid kitchen would appear well-placed as a format to appeal to consumers, occupiers and investors.’
• Langton comment. See premium email
Calls for further liberalisation:
• UKH has called on the Government to allow people to be able to order at the bar from 17 May, the date on which restaurants and pubs can open indoors. At present, table service is planned. UKH says only a minority of units will be able to open for outdoor trade from 12 April adding that, if operators aren’t allowed to make the most of it from 17 May, they may not survive. UKH’s Kate Nicholls says ‘the last 12 months have been truly awful for our sector. That is why any controls that limit commercial activity upon reopening should be necessary and proportionate.’ She continues ‘while any restrictions remain in place, our pubs and restaurants can only break even and the viability of thousands remains at risk – we lost over 12,000 in the last year alone.’
Other Covid news:
• Langton comment. See premium email
• London Mayor Sadiq Khan has announced £6m will be used to directly support the reopening of London’s economy once Covid restrictions are lifted. That doesn’t seem like an altogether huge sum. The money will cover advertising and the organisation of events and the provision of alfresco dining spaces. The Mayor has published a report by Gerald Eve and the LSE amongst others, which suggests that Central London is well-placed to recover strongly. However, it suggests that if home working remains prevalent, some 86,000 jobs could be lost in the city centre. Mayor Khan says ‘Central London is the engine of the UK’s economy. There simply won’t be a national economic recovery from Covid unless all levels of government realise the crucial importance of protecting central London’s unique ecosystem of shops, hospitality and world-leading cultural venues.’
• Pubs will be allowed to set up marquees in beer gardens this summer without the need for permission from the unit’s council.
• SIBA members are to protest at midday today as the trade body claims that small brewers have not received the same level of support as some other businesses.
• LDC reports that ‘despite the COVID-19 pandemic causing mass closures across the GB retail and leisure landscape, there were still 31,405 openings of independent units in 2020.’ Good stuff? Better than zero openings but LDC says ‘openings were just outweighed by 32,847 closures and resulted in the independent market shrinking by -0.4% (-1,442 units). However, this loss was minimal compared to the chain market which declined by -4.5%, equating to a loss of -9,877 units.’
• The Resolution Foundation says that half of British workers had a real-terms pay cut in the year to autumn 2020. Andy Haldane at the Bank of England says there is a tsunami of spending coming. Perhaps Resolution and Mr Haldane move in different circles.
Companies & other news:
• DPEU. See premium email
• Diageo has announced an $80 million investment into the expansion of its ready-to-drink operations in the US.
• Chipotle is to open a new restaurant on Chiswick High Rd. It has taken over the former Byron site.
HOTELS & LEISURE TRAVEL:
Will overseas holidays be possible this summer?
• Nobody wants to deliver bad news. The Defence Secretary drew the short straw over the weekend. We’ve all immediately forgotten his name. he’s now and forever just ‘that bloke who told us we couldn’t have a holiday.’ On a more serious, the ever-serious Guardian reports ‘Sage experts are worried about overseas breaks leading to rise in vaccine-resistant variants in UK.’ See our comments in the premium email yesterday. If vaccinated Brits cannot catch ‘ordinary’ Covid whilst abroad then, by definition a) they can only catch a new variety and b) also by definition, their compatriots when they return home would be similarly vulnerable to the returning holidaymakers spreading it.
• Travel company shares slid a little yesterday on consideration of the above news. Whilst On the Beach actually rose by 0.5%, shares in Carnival (a big, global player) were down 1.5% and Hostelworld was 3.1% lower. TUI shares were off by 4.4%, Saga (which has other businesses) was down 5.8% and Jet2 shares were some 6.9% lower.
• Langton comment: See premium email.
• An EU export ban would delay the UK’s Covid vaccine drive by two months, says The Guardian. This might would be a bit of a downer for the overseas holiday market. Travel Trade Gazette reports on Press comments that the UK government is exploring a traffic light system for the resumption of international travel. Hays Travel has told Travel Weekly that there is a ‘very mixed picture across the summer with uncertainty in some places running through into the autumn.’
• On the Beach CEO Simon Cooper has called for so-called “refund credit notes” to be scrapped and for consumers to be given cash refunds.
• Deliveroo price range, £7.6bn to £8.8bn valuation, will excite those who think it is a loss-making company without a clear path to profit. Others say that it will rocket on listing. Founder Will Shu said to be taking perhaps £50m off the table.
• Deliveroo IPO, price range edges up. Bull case. Everything goes as planned, delivery volumes do not backtrack, vertical integration leads to profits. Bear case. None or only some of the above happens, restaurants reopen as sulky competitors, they expand into dark kitchens etc.
FINANCE & MARKETS:
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RETAIL WITH NICK BUBB:
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TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 22 Mar 21 888 FY numbers (5.30pm)
• 23 Mar 21 DP Eurasia FY numbers
• 23 Mar 21 McColl’s FY numbers
• 24 Mar 21 M&B AGM
• 25 Mar 21 Compass Group H1 update
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• Est. 9 Apr 21 Barclaycard Consumer Spending (March)
• 13 Apr 21 Just Eat Q1 numbers
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• 22 Apr 21 Domino’s Pizza PLC AGM
• 23 Apr 21 Gear4Music results
• 28 Apr 21 Carlsberg Q1 numbers
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• 6 May 21 Bank of England MPC meeting
• 7 May 21 Intercontinental Hotels Q1 numbers
• Est 9 May 21 Barclaycard Consumer Spending (Apr)
• 12 May 21 Compass Group H1 numbers
• 12 May 21 Stock Spirits H1 numbers
• 12 May 21 TUI H1 numbers
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• Est 19 May 21 Marston’s H1 numbers
• 26 May 21 C&C FY numbers
• 24 Jun 21 Bank of England MPC meeting
• 27 Jul 21 Campari H1 numbers
• 5 Aug 21 Bank of England MPC meeting
• 10 Aug 21 Intercontinental Hotels H1 numbers
• 12 Aug 21 TUI Q3 numbers
• 18 Aug 21 Carlsberg H1 numbers
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• 26 Oct 21 Campari Q3 numbers
• 8 Dec 21 TUI FY numbers
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